Taking Stock: Revamped AUSA Vendor Meeting Draws Praise

I know there was some criticism of last year’s Ahold USAvendor meeting, primarily in terms of the length of the event. And perhaps that criticism was justified. My perspective has always been a bit different – when a key retail customer is willing to share so much data with their vendor partners and delivers it in the professional, thoughtful manner that Ahold always does, length should be secondary to the quality of information that’s provided.

This year’s session entitled “Reshaping Retail At Ahold,” held on June 13 at the Giant Center in Hershey, PA should not bring criticism from any quarters. The annual event attended by nearly 1,700 vendors was cut to a half-day confab. The individual speeches were shorter and zippier, but still provided enough meat for any supplier, distributor and broker to feel satiated.

With the sudden departure of Jeff Martin just a week earlier, the Ahold executive team had to do some scrambling to rearrange the agenda, but everything turned out flawlessly in the four hour time frame.

COO Carl Schlicker led off the meeting with a global overview of the entire Ahold organization (3,008 stores; 215,000 employees; $42 billion in annual sales). He provided the audience with a global financial report card for fiscal 2011 (5.5 percent sales growth; 4.8 percent underlying retail operating margin; and net income of $1.4 billion, a 19 percent increase over the previous year).

Schlicker apprised the vendors of Ahold’s strategic thinking, noting the organization’s strengths (“prime locations, excellent operations, innovative assortment and multiple formats”) and its balance (“passionate and focused associates, simplified structure and financial credibility”). The veteran industry executive also noted the differentiation between creating growth (formats for densely populated areas, tailoring, mass personalization, innovative assortment, small formats and online sales) and enabling growth (flexible, highly skilled personnel, retailing in a responsible way, efficient process and scale, value chain collaborations and sustainable products). One of the recurring themes of the entire program was that of increasing customer loyalty. Within that objective, Schlicker stated that Ahold must continue such initiatives as Peapod, “Project 100” (an initiative to make better use of existing store space) and “best in fresh.” He also addressed Ahold’s desire to expand its geographical reach (the company has $3.2 billion to spend on potential acquisitions and cap-ex improvements) noting such recent deals as Ukrop’s, 15 Genuardi’s stores, three Fresh & Green’s units and three King Kullen stores on Staten Island. He later added that Ahold is looking for further acquisition opportunities to the south and west of its Northeast base.

Schlicker then focused on the big retailer’s U.S. performance (four divisions – all number one in local market share except Stop & Shop NY, which is ranked third behind ShopRite and A&P; 759 units and leadership of all web driven grocers with its Peapod unit).He recapped last year’s accomplishments: surpassed $25 billion in sales; increased market share in all divisions; grew total households; realized cost savings; exceeded budget for second year; completed transition and single host initiatives; and continued to have a positive impact in its communities.

However, moving forward, Schlicker noted that the current impact of economic and business trends are already presenting new and difficult challenges. He cited the slow economic recovery; low consumer confidence; high gas prices; the decline of the supermarket channel; overall cost pressures; and a political environment, both at the national and state level that he termed was in a “stalemate.”

He noted that consumers now have more shopping choices than ever and acknowledged that Ahold USA can’t be all things to every shopper. However, he said that the right combination of quality coupled with price and convenience is a formula that will work for the retailer. Schlicker added that other components such as Ahold’s investment in technology will pay dividends for the company, both as new ways of reaching the consumer as well as understanding changing shopping habits.

As he neared the end of his talk, Schlicker introduced his management team, stating that he was proud of every one of them. In closing, the veteran of nearly 40 years in the industry declared that the winning formula for Ahold continues to be “Price + Quality + People + Value.”

Next up was a triumvirate of senior VPs – Eric Keptner (marketing and consumer insights); Jeff Dichele (non-perishable merchandising); and Steve Mayer (fresh merchandising). In a very interesting interactive dialogue, the three “amigos” focused on customer loyalty. Keptner noted that three key loyalty benchmarks – primary households, market share and recommend to a friend – all continued to grow in the past year. He added that AUSA’s goal is to retain its primary customers and migrate secondary customers to primary ones while profitably growing the total customer base. He urged the vendors to collaborate on actionable insights (CCR- Customer Centric Retailing), continue to support Ahold’s brand building priorities (‘Bonus Buys,” “Real Deals,” fresh brands, own brands, health and wellness, “local” programs and community engagement) and become engaged in customer specific marketing, loyalty programs and digital customer communication.

Dichele, in his typical dry, wry and self-deprecating manner, reviewed a scorecard which indicated that those vendors who partner with AUSA’s CCR initiatives are seeing better results. Dichele also noted the growth of CCR vendor partnerships in 2011.

One of the retailer’s most important priorities over the past two years has been an aggressive expansion of its digital platform. That will continue this year and in 2013. By the end of 2012, AholdUSAwill have made its mobile shopping list application available to customers in all divisions; it will strengthen its email marketing program; and it will integrate loyalty discounts with more load to card offers. Moreover, the chain’s “Scan It” mobile application will be usable in all “Scan It” stores. The retailer will also offer more grocery pick-up options and broaden its social coupon sharing in-store.

Also reviewed was AUSA’s gas rewards program, which grew from a participation rate of 25 percent last year to 33 percent in 2012.

The new kid on the block, Raymond McCall, senior VP-pharmacy and HBC, who joined the company 11 months ago, revealed some of Ahold’s health and wellness strategies including the expansion of its in-store clinics. Currently there are four such clinics operating under the company’s Giant/Carlisle banner. McCall hopes to expand the program to the other three divisions. He also spoke of the importance of healthy living and getting involved with AUSA’s “healthy ideas” plan which involves promoting foods that meet FDA standards for “healthy.”Vendors can partner with the chain through its “Healthy Ideas” magazine and “Kids Healthy Ideas” magazine and Ahold’s 2013 Health and Wellness Calendar. McCall noted that Ahold has a global goal that 25 percent of all products met the “healthy” criteria by 2015.

Mayer returned to the stage, this time as a solo performer. He reviewed dollar share progress for 2011 among all the five fresh departments (bakery, deli, meat, produce and seafood) and noted that only deli and seafood were down (produce was a big gainer). Mayer even threw in a little “schtick” when he unveiled his “freshness walks” checklist (“think like a customer; walk all departments in fresh to ensure that guest expectations are met”). He urged all department managers, store managers, division teams and support center associates to do the “freshness walk.”

I’ve always felt that the sales development job in the merchandising arena was among the toughest, and Ahold veteran Jodie Daubert is not only well qualified to supervise sales (she’s done so many different jobs in her 25 years with the organization), she brings a real creative flair and passion to the job. Among the new programs that Ahold will be rolling out this year are: a new club store initiative; a “push” program designed to create new sales through special purchases, season buys and cross-merchandising opportunities; meal ideas – which will incorporate time saving idea, cooking skills, budget, size of family, planning/organization and health consciousness to help both Ahold and its customers make easier and better choices with their meal planning; and an improved in-store demo program that Daubert promised would be informative, interactive and fun while utilizing more advanced technology. She also noted the importance of increasing AUSA’s unit sales.

Entering the stage as though he had been shot from cannon, executive VP-operations Bhavdeep Singh gave a rousing and passionate performance about AUSA’s stores. Without slides or notes, the former A&P executive talked about the need to rethink everything. “We are a good retailer now,” Singh explained, “but we have to get better.” Singh noted the importance of increasing the engagement level with the associates – “our existence depends on the excellence of our people,” adding that “within our stores lies the future of the company, from store managers to division presidents.” He offered that, while Ahold often makes its vendors accountable, the process should work both ways. “Whether it’s an improper display, a problem with in-stock conditions or an employee who can’t explain something about your product, please let us know,” Singh said.

The meeting’s last speaker was Tracy Pawelski, Ahold’s VP-community relations and external relations. Because of its special place as a provider of food, Pawelski noted that grocery retailers have a fundamental and basic responsibility that’s different from other industries, to help the communities they serve. She thanked the suppliers for all their charitable and philanthropic efforts, noting that vendors have contributed $8.7 million this year and Ahold has doled out $51.3 million in product and cash to fight hunger, improve children’s lives and build healthy communities. Another excellent speech filled with emotion and passion.

Carl Schlicker then returned to the stage as he and his merchandising and marketing team presented AholdUSA’s 2011“Vendor of the Year” awards. And the winners were…Marketing

A brief “Q&A” followed which revealed that the growth of Peapod is a major initiative in Ahold’s future plans and that the company hopes to achieve a whopping 40 percent sales level of penetration with it is own brands.

And in true Carl Schlicker form, in closing, the former Marine from New Jersey declared, “It’s not the glory, it’s the mission.”

Martin Handles Difficult Decision With Typical Dignity And Class

Message to Jeff Martin: I want to be your agent when you return to the business.

Actually, I feel more like Jeff’s press secretary after receiving more than 200 emails, phone calls and direct inquiries about his departure from Ahold USA.

Yes on one level, the news that Jeff Martin resigned last month as executive VP-merchandising and marketing is stunning. Arguably, he was the heart of the entire AUSA operation and viewed by many as COO Carl Schlicker’s right hand man. After being at the core of rebuilding much of Ahold’sU.S.business model over the past 30 months, Jeff seemed to be at the prime of his career and ready to handle new company challenges. And there will be other opportunities (perhaps even with Ahold) to tackle in Jeff’s future. But not now.

After I received an early morning call on June 8 alerting me of Jeff’s decision, I waited a couple of hours and then called Jeff at home. He was expecting my call. During the course of our conversation he was emotional but resolute with his decision to step down from a role in which many vendors and fellow company associates viewed him as among the best in the industry.

While he admitted he had been thinking of making a change in his life for several months, it took some time to finalize his decision.

Yes, the job itself was a factor (in my opinion, handling both merchandising and marketing for a $25 billion organization that just completed a major restructuring is among the most difficult jobs in the entire food industry). However, separating himself from the only company he’s ever known (Jeff began his career as a produce clerk at a Martin’s store in Hagerstown, MD in 1978), leaving dozens of friends and thousands of associates he has worked with and relinquishing the high-profile and significant compensation that he’s earned after 33 years, wasn’t going to be easy, either.

In the end, Jeff Martin made a decision that many of us often think about, yet rarely act upon. He walked away, knowing there were, for now, more important priorities to deal with.

In the past few years, he met Andrea Astrachan, Ahold USA’s former VP-consumer affairs. They ultimately fell in love and he began to recognize how important she was to him and how deeply he cared for her. He also realized there was more to life than working 15 hour days, answering emails at 11 p.m., traveling too much and sacrificing most of his life to a career that began at age 16.

When I asked Jeff to give me a quote to summarize his situation he said: “My 33 years with Ahold have been truly enjoyable. But as I approach age 50 this year, I have the opportunity to decompress and prioritize some other things in my life. I feel very blessed to be with a great partner in Andrea (Astrachan) and I will now have more time to spend with my daughter. I am not retiring from the business and I hope in the future I can make a positive contribution. However, for the present, I plan on taking care of some things that are important to me and my family.”

Of course, like many others, I have mixed feeling about his decision. I would agree with the feeling of many of his associates and vendors: he has been the best of the best at what he has done. Not only from a skill level, but Jeff Martin possesses so many intangibles that made him the great leader and person that he is.

His door was always open when there was a problem or issue to deal with (both personal or business); he was truly a glass-half-full type of person (who remained optimistic even during the toughest of challenges, but didn’t try to sugar-coat things, either); and he was a true professional in the way he conducted himself (his high level of integrity should be noted as should the fact that he treated everyone with dignity and respect).

So, it’s tough to say goodbye to one of the best, even though it will most likely be a temporary farewell. He’s leaving for all the right reasons: family, love and the personal time that’s needed to make those very important things work properly.

For that, Jeff Martin deserves everybody’s respect.

‘Round The Trade

Store of the month: the new Wegmans in Columbia, MD which opened on June 17. Even with its beer/wine/liquor store not yet approved, the new 125,000 square foot uber-store did well over $2 million the first seven days and the pace has not slackened in the ensuing two weeks. And for those wondering where the Rochester, NY merchant will be expanding in the future, Wegmans recently signed leases to build in Charlottesville, VA and will also be building a new store in affluent Montvale, NJ….I’m very impressed with Safeway’s “Just 4 U” online and mobile coupon program which was rolled out chain-wide last month. The application provides significant savings (for those who utilize the technology) and is easy to navigate, no small feat when dealing with digital ‘immigrants’ of my generation. More Safeway news: all 19 Genuardi’s stores that Safeway sold to other operators will have opened by the end of this month. Weis, which acquired three Genuardi’s stores in Pennsylvania– Conshohocken, Doylestown and Norristown– reopened those units five days after it passed papers on June 11. Ahold USA, which waited about six months to gain final FTC approval, will have all 15 stores open this month (operating under the Giant/Carlisle banner) as will McCaffrey’s Markets, which purchased the Newtown, PA unit from Ahold USA… more than 75 retail outlets in the B-W markets suffered significant power outages following the unusual weather event of June 29. The 80 mile swath of high winds (at least 60 miles per hour) which produced little precipitation but wreaked lots of havoc was particularly damaging to retailers in the Washington area, where once again Pepco was responsible for restoring power. Yes, the storm (called a derecho) was a freakish, unexpected event, but the nation’s worst utility kept its “reverse Midas touch” intact by being the slowest utility in the area to restore power. Word on the street was that Pepco would not add immediately add the personnel needed because of potential significant overtime expense. It’s no wonder that many consumers and food retailers have the same perception of the Washington DC based utility: it sucks…Wal-Mart officially celebrate its 50th anniversary on July 2. I wonder what “Mr. Sam” would think of the Behemoth he helped build when he opened his first store in Rogers, AR a half century ago?… a tip of the hat to Chris Kenny, 36, who late last month was named president and CEO of Kenny Family Shop Rites, the five store Wakefern member that operates all of its stores in Delaware. Chris’ dad, Bernie, 74, one of the best merchants in the Northeast, remains chairman… Santoni’s Market has left Supervalu and has named Bozzuto’s as its new primary wholesaler. The high volume one store retailer, which has operated in the Highlandtown section of Baltimore since 1930, announced its decision late last month… another wholesaler that has gained share in the Mid-Atlantic region, C&S Wholesale Grocers, has added industry veteran Max Henderson to its staff as senior VP-customer development. Max, who for many years toiled at Ahold USA (Giant/Carlisle, Tops), will be a real asset to C&S…a tip of the hat to Weis’ Kurt Schertle on his promotion to executive VP for the 164 store regional chain based in Sunbury, PA. Kurt’s new post is well earned and at age 40, he remains on the top of my draft board to become CEO of a significant retail organization in the next five years…on the earnings front, it was another successful quarter for Kroger which posted a 1.6 percent earnings gain to $439.4 million in its first quarter ended May 19. Identical store sales (excluding fuel) rose a very healthy 4.2 percent and overall sales increased 5.8 percent to $29.1 billion. “Kroger’s solid first quarter performance demonstrates, that our ‘customer first’ strategy continues to resonate with customers,” said David Dillon, chairman and CEO. “Our core business is growing, and we are rewarding shareholders through earnings growth, increasing dividends over time and share buybacks.”…at the other end of the performance spectrum is Rite Aid. The Camp Hill, PA drug chain held its annual meeting on June 21 at the Holiday Inn in Swatara Township, PA.“We’re making very good progress,” CEO John Standley told shareholders. “We’ve had solid sales growth and ‘script’ growth, which are key to getting where we want to grow.” To give Standley his due, the former Fred Meyer and Pathmark executive has only been chief executive only two years (he replaced the underwhelming Mary Sammons) and the numbers have improved slightly. However, the company’s recently released third quarter earnings for the period ended June 2 still leave a lot to be desired. Rite Aid lost $30.7 million (compared to $65.5 million last year) and, while comp store sales increased 2.5 percent in the first quarter, that metric fell for the entire month of June when comps declined 1 percent. Again (and please pardon my political incorrectness), this “narrowing” of losses spin falls into the “for a fat girl she didn’t sweat much” category. When Rite Aid is consistently profitable, its stock prices shows some bounce (RAD was trading at $1.41 per share on July 5) and is also gaining market share on its rivals (Walgreens, CVS), that is when it would be more appropriate to use the term “very good progress.” Am I the only one turned off by the financial “double speak” that CEOs of struggling organizations often use so they don’t have to disseminate continuing bad news?… one final note about Jeff Martin’s departure: during Ahold’s annual vendor meeting. Carl Schlicker paid tribute to Martin, noting his impact on the company and the 15 years of personal and professional friendship he enjoyed with him. “We will miss him,” Schlicker said to an audience filled with vendors and Ahold associates. “This hit us hard, but I’d like to thank him for 33 years of dedicated service to the company. He will always be a friend.” That was a classy thing to say about a classy guy from one of the classiest, most professional leaders in the entire industry…another tough month in the obituary column. Passing away on June 21 was Kenneth Herman, co-founder of Jumbo/Shoppers, who helped pioneer warehouse-style retailing in the Washington, DC area. Kenneth was not only an innovator and first team Hall of Fame member, but I’ll always remember him for being one of the nicest people I’ve ever met in this business and for his tireless work ethic and constant positive outlook on business and in life. Also leaving us in the past month was Gene Doerfler, former director of real estate for Giant/Landover. Gene served Giant for more than 30 years and more than anybody else, taught me how the real estate game was played in this business. Much like Kenneth Herman, Gene Doerfler was a brilliant, selfless executive who cared deeply about his company and the associates he worked with. I’m also sorry to report the death of Sharon Brannon, former manager of the Maryland Food Center Authority (MFCA) in Jessup, MD. Sharon Brannon joined the MFCA in 1989 as assistant to the director and in 1995 was promoted to market manager. She retired in 2009. From the world of entertainment, I’m sad to report the death of the great sports artist LeRoy Neiman. His impressionist works featured bold, bright brush strokes that captured many famous sports figures over the past half century including Muhammad Ali, soccer great Pele and Joe Namath. And let’s not forget that Neiman’s career breakthrough can be credited to Playboy’s Hugh Hefner, for whom he created the long-running “Femlin” cartoon series that began in 1955. Just before presstime, we learned of the death of Andy Griffith, who reached iconic status for his role as Sheriff Andy Taylor on “The Andy Griffith Show” which ran from 1960-1968 (and a show that many baby boomers can still remember each episode).Griffith returned to TV stardom nearly 20 years later with “Matlock” (1986-1995). Although “The Andy Griffith Show” made him a household name to millions of Americans (and a very wealthy man to boot), some of Griffith’s best work can be seen early in his career as a film actor, including “No Time For Sergeants” (1958) in which he reprised a role he first made famous on Broadway. A year earlier, Griffith made his film debut in Elia Kazan’s “A Face In The Crowd” (1957) in which he was cast as a slick-talking southern drifter named “Lonesome” Rhodes, who becomes an overnight sensation after being “discovered” by a producer (the always underrated Patricia Neal) in an Arkansas jail. She decides that Rhodes’ charisma is worthy of a radio spot. As he ascends to stardom, Rhodes attracts fans, sponsors and endorsements by the carload, and soon he is the most powerful and influential entertainer on the airwaves. Beloved by his audience, the real Lonesome Rhodes reveals himself to be a power-hungry manipulator who will use anybody around him for personal gain. Just when it seems that there’s no stoppingRhodes’ megalomania, Neal exposes his true personality. Forty-five years later the film still holds up and it remains, in my opinion, Griffith’s best work.